JUDGMENT OF 11. 12. 1973 — CASE 141/73 LOHREY v GERMANY

In Case 141/73 Reference to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht (Administrative Court) of Frankfurt-on-Main for a preliminary ruling in the action pending before that court between

THE COURT composed of: R. Lecourt, President, A. M. Donner, M. Sørensen, Presidents of Chambers, R. Monaco, J. Mertens de Wilmars (Rapporteur), P. Pescatore, H. Kutscher, C. Ó Dálaigh, A. J. Mackenzie Stuart, Judges, Advocate-General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Issues of fact and of law

I — Facts and procedure

II — Observations submitted under Article 20 of the Statute of the Court of Justice

A — Observations of the plaintiff in the main action

B — Observations of the Commission

C — Observations of the UK Government

D — Observations of the German Government

Grounds of judgment

Costs

I —. Facts and procedure

(a). Has the third sentence of Article 93 (3) of the EEC Treaty to be interpreted as meaning that the Commission has in any case to reach a final decision, i.e. even when the proposed national law has been held by the Commission to be compatible with Article 92 of the EEC Treaty?

(b). If the Commission does not without delay initiate the procedure in accordance with the second sentence of Article 93 (3) of the EEC Treaty, after being informed by the Member State in accordance with the first sentence of Article 93 (3) of the EEC Treaty, does this have the consequence in law that the prohibition contained in the third sentence of Article 93 (3) of the EEC Treaty ceases to apply and the system of aid may be introduced?

(c). Does the prohibition contained in this provision still apply if the procedure in accordance with the second sentence of Article 93 (3) of the EEC Treaty, in spite of the Commission having been informed by the Member State in sufficient time, is not initiated until after the system of aid has come into effect?

(d). If question (b) is answered in the negative and question (c) in the affirmative, is the making of a final decision a precondition of the validity of the proposed national law, and must a national law enacted contrary to this provision be regarded as invalid or inapplicable until the decision has been reached?

(e). Are the words Member State in the third sentence of Article 93 (3) EEC Treaty to be interpreted as meaning that failure to observe this provision infringes the direct rights of private parties, or must the national court, in the circumstances of question (d), of its own motion take account of the invalidity of the law in its decision?

II —. Observations submitted under Article 20 of the Statute of the Court of Justice

A —. Observations of the plaintiff in the main action

B —. Observations of the Commission

C —. Observations of the UK Government

D —. Observations of the German Government

1. By order dated 28 May 1973 filed at the Registry on 25 June 1973, the Verwaltungsgericht, Frankfurt-on-Main, referred several questions, under Article 177 of the EEC Treaty, relating to the interpretation of Article 93 (3) of the Treaty establishing the European Economic Community.

2. Article 93 provides procedure enabling the Commission to discover State aid incompatible, having regard to Article 92 of the Treaty, with the common market, and to provide for its abolition or to prevent its implementation.

3. In stating that the Commission shall be informed of plans to grant new or alter existing aid in sufficient time to enable it to submit its comments, the draftsmen of the Treaty have sought to provide this institution with sufficient time for consideration and investigation to form a prima facie opinion on the partial or complete conformity with the Treaty of the plans which have been notified to it.

4. According to the last sentence of Article 93 the Member State shall not put its proposed measures into effect until this procedure has resulted in a final decision.

5. On the other hand although it is in the interests of good administration for the Commission, when, at the end of the preliminary examination, it considers that the aid conforms with the Treaty, to inform the State concerned, it is not however bound to take a decision, thereon within the meaning of Article 189 of the Treaty, since Article 93 requires such a step only at the end of the contentious procedure.

6. In the first place, therefore, it is proper to reply to the questions put that Article 93 (3) of the Treaty must be interpreted as meaning that if the Commission, during the preliminary period, arrives at the conclusion that there is no need to initiate the contentious procedure, it is not bound to issue a decision within the meaning of Article 189.

7. The third question asks whether the term Member State in Article 93 (3) of the Treaty must be interpreted as meaning that the individual has a direct right in the non-infringement of this provision or whether it, at the very least, requires the national court of its own motion to take account of the invalidity of a law which grants aid in contravention of the prohibition on implementation laid down in Article 93 (3).

8. It has already been decided in the judgment of 15 July 1964 (Case 6/64, Rec. 1964, p. 1141), that the prohibition on implementation referred to in the last sentence of Article 93 (3) has a direct effect and gives rise to rights in favour of individuals, which national courts are bound to safeguard.

9. As regards the second part of this question, while the direct effect of the prohibition in question requires national courts to apply it without any possibility of its being excluded by rules of national law of any kind whatsoever, it is for the internal legal system of every Member State to determine the legal procedure leading to this result.

10. The costs of the Governments of the Federal Republic of Germany and of the United Kingdom, as well as those of the Commission of the European Communities, which have submitted observations to the Court, are not recoverable, and as these proceedings are, in so far as the parties to the main action are concerned, a step in the action pending before a national court, the decision on costs is a matter for that court.

On those grounds, Upon reading the pleadings; Upon hearing the report of the Judge-Rapporteur; Upon hearing the observations of the Government of the Federal Republic of Germany, the Government of the United Kingdom and the Commission; Upon hearing the opinion of the Advocate-General; Having regard to the Treaty establishing the European Economic Community, especially Articles 92, 93, 173, 175 and 177; Having regard to the Protocol on the Statute of the Court of Justice of the European Economic Community, especially Article 20; Having regard to the Rules of Procedure of the Court of Justice of the European Communities; THE COURT in answer to the questions referred to it by the Verwaltungsgericht, Frankfurt-on-Main by order of that court dated 19 March 1973, hereby rules:

1 The third sentence of paragraph 3 of Article 93 must be interpreted as meaning that if the Commission, during the preliminary examination of aid which has been notified to it, arrives at the conclusion that there is no need to initiate the contentious procedure, it is not bound to issue a decision within the meaning of Article 189.

2 If the Commission, after having been informed by a Member State of a plan to grant or alter aid, fails to initiate the contentious procedure provided for in Article 93 (2), by giving notice to the Member State concerned to submit its comments, the latter may, at the expiration of a period sufficient to enable the aid to undergo a preliminary investigation, grant the proposed aid, provided that it has given prior notice to the Commission, and this aid will then come under the system of existing aids.

3 The direct effect of the prohibition on the Member State concerned from putting its proposed measures into effect extends to all aid which is granted without being notified and, in the event of notification, is granted during the preliminary period, and up to the final decision where the Commission sets in motion the contentious procedure. As regards the whole of this period it confers rights on the individual which the national courts are bound to safeguard.

4 While the direct effect of the last sentence of Article 93 compels national courts to apply this provision without it being possible to object on the grounds of rules of national law, whatever they may be, it is for the internal legal system of every Member State to determine the legal procedure leading to this result.